Western liberal democracies have recently been engaged in an intense debate about the ‘failure’ of multiculturalism. It has been argued that public funding for multiculturalism provides incentives for some migrant communities to remain isolated within their existing social groups thereby creating ‘silos’. And that, as immigrants become increasingly disconnected from the wider society or country in which they reside, these ‘silo’ communities are breeding grounds for social unrest. The emerging paradigm shift in immigration policy across the globe promotes the idea of abandoning multiculturalism in favour of ‘integration’ and the associated prioritisation of host culture. The policy debates, however, lack the focus on economic rationale for ‘integration’. Our investigation attempts to fill this gap by developing econometric model(s) to evaluate the aggregate economic outcomes of two social (/non-economic) variables, linguistic isolation and social segregation across two geographic units, US metropolitan areas and US states.
First, we consider social silos created through linguistic isolation. For a panel dataset for the years 1980–2000 for 226 American cities, our investigation identifies that although linguistic and cultural diversity increases the average income of working age population in American cities, the higher proportion of foreign-born population, who are not fluent in English, moderates the positive contribution of linguistic diversity. The findings are robust after accounting for endogeneity bias using a set of instrumental variables. Second, we develop a logistic regression model to evaluate if linguistic isolation can identify as a causal variable for differences in poverty rates across 48 contiguous states. We develop an Ordered Probit model with a panel dataset for 2000, 2005 and 2010, with five strata and thereby estimate marginal probability effects of explanatory variables. Our results signify the economic impact of social variables, as the states with high linguistic isolation have a higher probability to be in the high and very high poverty groups. Third, we consider the economic impact of racial segregation, as a proxy for residential segregation. Our results provide empirical evidence that the more racially segregated US states have higher level of income inequality.
Hence, we argue that there is an ‘economic’ rationale for reducing social isolation in multicultural societies beyond the US. More importantly, we suggest a policy of ‘inclusive’ multiculturalism that encourages social inclusion of immigrants or creation of ‘bridges’ across social groups for maximizing the economic payoff of diversity.

About the lecturer:

Nazmun N. Ratna teaches Economics at the Faculty of Commerce, Lincoln University, New Zealand. A Bangladeshi by birth, she obtained Bachelor of Social Science (Hons.) and Masters of Social Science in Economics from the University of Dhaka, and a Masters of Economics of Development and a Ph.D. from Crawford School of Public Policy, The Australian National University (ANU), Canberra. In her PhD thesis she applied economic theories, and two modelling techniques, Agent-Based Modelling (ABM) and Econometrics, to devise economic rationale for policies related to economics of social networks, social capital and immigration economics. Although she continued to work on this area with publications in applied economics journals, her research supervision so far has concentrated on economics of development in South East Asia, and very recently, on food security and food poverty in New Zealand and Africa. As part of a EUCN funded pilot project titled “Does multiculturalism contribute to economic assimilation?: Examining intergenerational convergence of immigrant children in settler societies”, Nazmun is working as a visiting scholar at the Department of Sociology, Utrecht University and Interuniversity Center for Social Science Theory and Methodology (ICS). In her spare time, Nazmun enjoys travelling, watching movies, ‘café-hopping’ and photographing her picturesque adopted country, New Zealand.